Tax appeal season will be starting again in just a few short weeks. By November 15, Monmouth County property owners will be able to view their 2017 tax assessments and file appeals on those assessments. By February 1, property owners in other counties will be able to view and appeal their assessments. With these deadlines in mind we need to deal with the subject of revaluations (and in particular, Monmouth County revaluations) and how they should affect your decision as to whether to file a new appeal for 2017.

As many Monmouth County taxpayers are aware, the county has adopted the Assessment Demonstration Program, which encourages its towns to perform annual revaluations or re-assessments of all properties on a continual basis. Only a few towns in Monmouth County have, thus far, opted out of this program. Since properties that have been revaluated or re-assessed are not subject to the limitations of the Freeze Act[1], the following information may apply if you have filed a tax appeal during a prior year:

If you currently have a Tax Appeal pending in Tax Court for a prior tax year, please be advised that the reduction in assessment that you may receive when that appeal is finally heard or settled might only be applicable to the tax year for which the appeal was filed. In order for you to preserve your rights with regard to your 2017 assessment, you will need to file a separate appeal for 2017. Please note that in cases where the original assessment of the property is under $1,000,000, the 2017 appeal must originate as a filing in the County Tax Board, before it can be “affirmed” and then appealed to the Tax Court.[2]

As another Tax Appeal season is upon us, we would like to thank our clients and our appraisers for a great season of tax appeals. For the 2016 tax year, we saved our clients more than $12 Million in tax assessments. Starting on October 5, 2016, our office will begin accepting tax appeals for the 2017 tax year. Since all final judgments in Monmouth County are under the cloud of the new Assessment Demonstration Program, the following information is essential for all Monmouth County residents.

Monmouth County’s Assessment Demonstration Program was implemented in 2014, ostensibly as a means of ensuring that all taxpayers are paying their fair share of property taxes. Under the new program, property tax assessments are revised annually to bring every assessment to 100% of true market value, as established as of October 1 of the pretax year. The program also includes provisions to allow for a 5-Year Data Collection Cycle, thereby increasing the frequency at which property data would be collected or verified.

By conducting annual revaluations, the County will effectively remove “fractional assessments.” All properties in Monmouth County will now be assessed at 100% of true market value. The old system of dividing an assessment by the town’s equalization ration to determine the true value assessment would, therefore, no longer be necessary in Monmouth County. Similarly, the arithmetic process of adding 15% to the equalization ratio to determine whether the assessment is within the “Chapter 123 corridor” is also not necessary. However, with annual revaluations comes a consequence for all taxpayers who had previously filed appeals.

In our two most recent articles, we discussed two ways in which tenants can delay or stop an eviction from taking place. We discussed applications to set aside verdicts due to fraud or other good cause. We also discussed applications for Hardship Stays, to allow the tenant additional time to move out, provided that the tenant can post all of the rent that is due and owing and stay current on the rent obligations during the Hardship Stay. For the reasons discussed in those articles, both of those applications are seldom granted. In a case where the tenant’s application is not granted, the Court may still consider whether the tenant is eligible for an Order for Orderly Removal, granting the tenant a few extra days to remain in the premises.

In this month’s article, we will discuss the application for Orderly Removal. Pursuant to New Jersey Court Rule 6:6-6(b), the tenant facing a lockout can apply to the Court for an extra seven days to remain in the premises without the payment of any money.

In last month’s article, we discussed applications filed by tenants to have Judgments for Possession set aside. This month, we will discuss one other type of post-judgment applications that tenants may make in order to delay their lockouts. Specifically, in this article, we will discuss Hardship Stays.

On the day of Landlord Tenant Court, some cases are settled, and some cases result in the immediate entry of a Judgment for Possession, very often due to the non-appearance of the tenant. Following the entry of a Judgment for Possession, whether it is by way of a default, or a breach of a settlement agreement, the landlord may order a Warrant of Removal. Sometimes, following the Judgment for Possession, the tenant will attempt to pay the Landlord the rent that is due. However, after the Court date (or after the date that a settlement agreement is breached), the Landlord is under no obligation to accept the rent. The Landlord has the right to proceed with a Warrant of Removal and a lockout. When this occurs, if the tenant has the rent that is due and owing, the tenant may post that rent with the Court, pursuant to N.J.S.A. 2A:42-10.1 or N.J.S.A. 2A:42-10.6 and request a Hardship Stay. In cases where the past due rent is posted with the Court and a Hardship Stay is deemed appropriate, the Judge will issue an order delaying the lockout and compelling the parties to appear in Court for a “return date,” during which the parties can argue about the duration of the Hardship Stay.

The Hardship Stay can last for a maximum duration of six months. However, the Court will not necessarily grant a full 6-month Hardship Stay all at once. In most instances, the Court will grant a Hardship Stay for a shorter period of time and afford the tenant the opportunity to come back to Court at a later date if additional time is needed for the tenant to find alternate housing. In all Hardship Stay matters, the tenant must continue to stay current with rent throughout the entire duration of the Hardship Stay. In the event the tenant fails to pay rent during any month of the Hardship Stay, the Landlord may request that the Hardship Stay be immediately set aside and that the Warrant of Removal be executed.

For the past 15 years, our office has been reporting on issues regarding New Jersey Landlord Tenant law. In today’s article, we will discuss the application for an Order to set aside the Judgment for Possession based on fraud or other good cause, pursuant to New Jersey Court Rule 4:50-1. These applications are generally made during the 3-business day “window” between the posting of the Warrant of Removal and the Execution of the Warrant of Removal (i.e.; the lockout). Tenants making these applications will allege a variety of perceived issues, which are generally not valid reasons for setting aside a verdict.

One common attempted defense is the tenant’s statement that he or she was never served with the Complaint. However, since a copy of the Complaint is served to the tenant via regular mail and another copy of the complaint is served to the tenant via hand-delivery to the dwelling, and the Special Civil Part Officer signs an affidavit, stating that he served the tenant, the argument that the tenant was not served is generally not credible, and are summarily dismissed by the Judge hearing the application.

Sometimes the tenant will state that he or she was in the hospital on the day of the Landlord Tenant Court date (a surprisingly common occurrence with tenants facing eviction). Provided that the tenant can show proper documentation of the hospitalization, the Court will be satisfied that there was excusable neglect in the tenant failing to appear in Court. However, a thorough Judge will then also attempt to determine whether there is a meritorious defense to the claim (i.e.; does the tenant still owe rent?). After all, it is not enough for the tenant to merely prove that he or she was unavailable on the day of Court. The tenant must prove that as of the day of Court, there really was no valid claim that should have existed.

Our 2016 Monmouth County Tax Board hearings are now completed. As we prepare for another batch of hearings in the remainder of the County Tax Boards, we will discuss four of the more common errors that taxpayers make that have resulted in dismissals of their matters.

Refusal to Allow Access to Premises

When conducting re-assessments or revaluations, tax assessors or employees of the revaluation company may request access inspect houses. Sometimes, even in non-revaluation years, a taxpayer may receive such a request if a tax appeal is pending and the assessor needs to verify his or her information. While you certainly have the right, under the Fourth Amendment to the United States Constitution, to refuse access to government employees, you should expect that the refusal to grant access to the assessor will likely be construed as your affirmation that the assessor’s predetermined information is correct. In other words, if you want to tell the Tax Board that the property information provided by the assessor is not accurate, you should not expect too much sympathy from the Commissioners, once the assessor mentions that you refused access. Notwithstanding the Fourth Amendment, it would not be reasonable to refuse access and then show up at a tax appeal hearing to contest the findings of the assessor.

During the past five months, our office has responded to several hundred inquiries regarding real estate tax appeals for the 2016 tax year. The initial inquiries mostly concerned Monmouth County properties, where the filing deadline was January 15. A single exception exists for Wall Township properties, where the filing deadline has been extended to April 1, due to the municipal-wide revaluation. Wall Township is the only town in Monmouth County that had not previously undertaken a revaluation since the pilot program was instituted in Monmouth County in 2013.

The revaluation in Wall Township has, however, caused a great deal of confusion among taxpayers, many of whom have the erroneous belief that the drastic increase in their assessments would result in a significant increase in their tax bills. Fortunately, this is not the case. The tax rate for each town is calculated by dividing the municipal budget by total of all assessments. The former assessments, which had been equalized at about 60% of true value, necessitated a very high tax rate. Put simply, when all the properties in town were under-assessed, a higher tax rate was required to ensure that the tax revenue still matched the municipal budget.

Now that Wall Township has undertaken the task of bringing all the assessments back to 100% of true value, the tax rate would need to drop commensurately in order to make the arithmetic work. Of course, any time there is a municipal revaluation, there will be a few property owners who will become over-assessed. While a drastic increase in assessment is not sufficient cause to file a tax appeal, an over-assessment is a very good cause to file a tax appeal. During the next few weeks, our office will continue to field phone calls and emails to answer any questions that taxpayers may have regarding their assessments.

Most American businesses keep track of their charges and receivables using a “first in, first out” method. The central principle of this method, referred to as “FIFO,” is to apply customers’ payments toward their earliest balances first, and then toward their later balances. New Jersey landlords had also accepted the FIFO method of accounting until relatively recently, when the State Supreme Court ordered that eviction complaints follow a specific format, in which tenants’ unpaid charges are specifically set forth in detail.

Using the FIFO method, for example, if a tenant failed to pay rent January and February, the next payments that the tenant did remit would be applied to January and February. That application would certainly create a gap in later months in which the payments were made. In the event that the eviction complaint followed the same methodology, it might appear that the tenant owed rents from March and April (or whatever the most recent months were), when the two missed payments were really from January and February. This method is unfortunately confusing for tenants who may show up to Court with receipts to prove that they paid certain rents, only to find that the receipts that they produced do not refer to the missing payments in question.

Prior to the institution of the revised eviction complaint format, we had found that the best method of proving the balance owed in a trial involves going back to the ledger to determine the last date when the balance owed was $0.00. Then the landlord should add up all the rents that became charged since that date (i.e.; the monthly rent multiplied by number of months). Then the landlord should add up all the receipts that were paid during that same time period, and subtract that number from the amount of rents charged to determine how much was still owed.

A few years ago, I was attending a conference for the New Jersey Chapter of the International Association of Assessing Officers. The moderator introduced the Monmouth County Tax Administrator, Matthew Clark, to discuss a new program he was implementing. Mr. Clark discussed his new website to enable the electronic filing of all tax appeals. He also spoke about changes to the tax appeal calendar to ensure that tax appeals were filed and decided before the date that the municipalities were required to finalize their budgets. These all seemed like good ideas. Then Mr. Clark spoke about making data more available to assessors to create a group of “super-assessors,” who could annually perform revaluations. Since one of the exceptions to the Freeze Act is a revaluation, it is clear that the process of annual revaluations would substantially vitiate the benefits of a tax appeal. Later that day, I approached Mr. Clark with a request that he reconsider his position on annual revaluations. That request did not draw much response other than an acknowledgement that the plan was already a fait accompli.

Annual revaluations are commonplace in many towns in Somerset County, although they are not specifically legislated like they are in Monmouth County. Since revaluations are time consuming and expensive, New Jersey towns have historically avoided performing them until they have been compelled to do so by the County Tax Board. Instead, towns have opted to make adjustments only to the tax rates, which are not appealable. The arithmetic works out the same, of course. Either way, the town satisfies its budget, although avoiding revaluations can produce some unfair results in cases where there is a substantial deviation in the changes in real estate values in different parts of the town.

A recent series of newspaper articles heavily insinuated that the annual revaluation program was a ploy to line the pockets of one of the former Tax Board Commissioners, who is now employed by the company that does many of the revaluations. The articles are certainly eye-catching, but they unfortunately lack merit, and they fail to produce any evidence of any actual misfeasance. Other than a common link between the Tax Board and the revaluation company, there is no substance to support the allegations.

Several months ago, we discussed the Abandoned Property Act. Under N.J.S.A. 2A:18-72, et. seq., a landlord cannot dispose of a tenant’s property until the following two conditions occur:

The Landlord must have regained possession from the tenant, either by way of eviction action, or by way of other conclusive proof that the tenant has voluntarily surrendered possession of the premises (e.g.; the tenant turned in the keys or indicated in writing that he or she has surrendered possession); and

The landlord shall also serve the tenant with a written notice, advising the tenant that he or she must claim all belongings in the apartment within 33 days, or they will be presumed to be abandoned, and may be disposed of.